FIN 202 Project

Each student is assigned a company listed in the Saudi Stock Exchange -

Tadawul (see the excel file on LMS to find your company). Your job is
to calculate the following ratios based on what you have learned in class.
You will accomplish this by using data from your company’s financial
statements either from www.tadawul.com or from the company’s main
website for the year 2019. For each ratio, you will have to answer
questions associated with these ratios:
Arabian Shield Cooperative Insurance Co.
1. What is the price/Earning (P/E) Ratio? If you know that the
average insurance industry P/E ratio for 2019 was 19.47, how
do you feel about the stock as a financial analyst? ? Is it risky
or not? Justify your answer.
Solution
Price Per Share
(P/E) = Earning Per Share
Net Income
EPS ¿ Outstanding Shares

Net Income SAR 7, 264,000 (2019) and SAR 22,543,000 in (2018)

Outstanding shares = 30,000,000
SAR 7,264,0000
EPS ¿ 30,000,000 = 0.24
SAR 22,543,000
EPS¿ 30,000,000 = 0.75

Price Per Share =SAR 17.32 (December 31, 2019)

 =SAR 18.40 (December 31, 2018

(P/E) = SAR17.32 0.24 = 72.17 (2019)

(P/E) = SAR 18.40 0.75 = 24.53

The P/E ratio for Arabian Shield Cooperative Insurance Co. improved
from 24.53 in 2018 to 72.17 in 2019. The P/E ratio is above the
industrial average, which is 19.47, which means the stock price is high
compared to the company earnings. The shareholder for Arabian Shield
Cooperative Insurance Co. should expect higher earning compared to
other insurance company, however, the higher the earning, the higher the
risk associated with their investment

2. What is the book value per share? If you compare the book
value per share to the most recent market price (recent closing
price), are you more or less confident in the stock? Would you
buy the stock? Why or why not?
Common Equity
Book Value per Share = Shares Outstanding

Common Equity = SAR 300,000,000

Outstanding Shares = 30,000,000 (Note 26 2019 financial statement)
SAR 300,000,000
Book Value per Share = 30,000,000

BVS = SAR 10.00

Market Value per Value (April 12, 2020) SAR 13.38
The market price is above the book value, which implies the stock is
overvalued, and the stock market is assigning a higher value to the
company due to the potential of it and assets earrings power. I would
buy the stock since most investor agrees that has excellent prospects for
growth and expansion.

3. What is the stock’s earning per share (EPS)? If you know that
the average insurance industry EPS ratio for 2019 was 0.4, how
do you feel about the stock as a financial analyst?
Net Income
EPS ¿ Outstanding Shares

Net Income SAR 7, 264,000 (2019) and SAR 22,543,000 in (2018)

Outstanding shares = 30,000,000
SAR 7,264,0000
EPS ¿ 30,000,000 = 0.24 (2019)
SAR 22,543,000
EPS¿ 30,000,000 = 0.75 (2018)

The EPS decreased from 0.75 in 2018 to 0.24 in 2019, which means that
the company profitability reduced significantly. However, the ratio was
above the industrial average by 0.20, implying that the company is more
profitable compared to its competitors and peers.

4. Calculate the following ratios: current ratio, profit margin,

operating margin, and ROA.

Current Assest
Current Ratio = Current Liability
 SAR 1,108,633
Current Ratio = SAR 670,974 =1.65

The current ratio is above one, which means that the company
financially stable.
Profit Margin
Net Income
Profit Margin = Revenue *100

SAR 7,264
Profit Margin = SAR 463,627 *100 = 1.566%

Operating Profit Margin

Operating Profit
Operating Profit Margin = Revenue *100
SAR 16,941
Operating Profit Margin = SAR 463,627 *100

= 3.65%
Return on Assets (ROA)
Net Income
ROA = Total Assets

SAR 7,264
ROA = SAR 670,974